The settlement avoids litigation costs and the Allendale school denies improper action.
Kendra Velzen sued last year, saying the school was violating federal housing rules. She says the guinea pig helped her cope with physical and emotional challenges.
She had been allowed to keep the animal but was concerned with possible restrictions.
Velzen and the Fair Housing Center of West Michigan, which supported her efforts, agreed to dismiss the lawsuit last month.
As part of the settlement, the school plans to work with the center on a policy for accommodating support animals in on-campus housing.